The National Payments Corporation of India (NPCI) has introduced a big twist in the way UPI transactions work: you can now link some credit cards, specifically RuPay cards, to UPI apps such as PhonePe, Google Pay, Paytm, and BHIM. What this lets you do is use your credit card the way you use a debit card on UPI — but still earn rewards, cashback, or points from your card issuer.
For those who want to get the maximum benefit out of rewards on everyday spends, this is a game-changer.
How UPI credit card payments are made
Earlier, UPI transactions used to require linking your debit card or bank account. But with the recent update, if you have a RuPay credit card (issued by SBI, HDFC, PNB, among others), you can connect the same to your UPI ID and pay merchants directly from the app. The process is identical — scan a QR code or enter a UPI ID, but instead of money being taken out of your bank account, the payment is charged to your credit card.
You then pay back this amount at your scheduled monthly statement date on your credit card, just like any other purchase with a card. Since this is deemed a normal point-of-sale (POS) transaction, it earns rewards, unlike cash back or peer-to-peer transactions.
Where you can earn rewards
You earn rewards only on merchant UPI QR payments, i.e., at retail stores, pharmacies, restaurants, petrol stations, and online business platforms. These are merchant payment transactions. You don't earn rewards on money transferred to friends or paid to someone using UPI — these transfers aren't allowed for using a credit card on UPI in the first place.
Reward points, cashbacks, and perks vary with your card provider and scheme. UPI merchant payments are treated by banks in the same manner as card-swipe transactions in stores.
Limits and precautions
Even though RBI allows UPI credit card linking currently only for RuPay network cards, other networks are expected to come on board. The current daily limit on UPI credit card payments is ₹1 lakh. Yet, internal limits set by specific banks could be lower, especially for new-to-UPI customers.
Make sure to track your spendings and stay within your credit limit. In contrast to debit UPI payments, credit card spend can quickly spin out of control if you don't pay on time — and tardy payments incur hefty interest charges.
UPI via credit card remains a new facility — but utilized prudently, it's a hassle-free way of earning rewards on your regular expenditure. It's always prudent to contact your card provider for reward eligibility, payment limits, and due dates so as not to get into a debt trap in availing such a facility.
FAQs
1. Is Visa or Mastercard credit card available on UPI?
No. RuPay credit cards alone can be linked with UPI apps at present. Visa and Mastercard credit cards are not yet supported as per NPCI's UPI guidelines.
2. Will I earn reward points on UPI payments against credit cards?
Yes, if you use your RuPay credit card to make payment to merchants using UPI. Rewards are generally the same as for card-swipe purchases. Rewards don't apply to peer-to-peer transfers or cash-like transactions, however.
3. Which UPI apps allow credit card linking?
A few common apps like PhonePe, Google Pay, Paytm, BHIM, and Mobikwik now allow RuPay credit card linking. Ensure that the app and the issuer of your credit card both offer the facility.
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